How can we help you navigate the evolving fixed income asset class?

New fixed income return opportunities and risks

Marina Mets

Head of Americas, Fixed Income and Multi-Asset Index Product Management

Nowhere are the markets changing so rapidly as in fixed income, the asset class that sits at the foundation of the financial system. And nowhere do asset owners and investors need more help to come out ahead.

There’s been a big shift in risk and return. After fifteen years of near-zero interest rates, since 2022 we’ve moved to higher yields after the post-Covid burst in inflation.

Suddenly, investors face new return opportunities and risks from different fixed income categories. There are big decisions on how to deploy capital by sector and along the yield curve.

But there are also major structural changes going on.

I’d highlight three trends.

First, there’s the increasing electronification and modernisation of bond trading. This has important implications for how we price and measure the fixed income markets.

In some fixed income segments, electronification is now nearly as developed as in the equity and foreign exchange markets. Prices are formed on central trading venues like TradeWeb, rather than in bilateral trading.

Tradeweb’s prices help drive the real-time pricing of fixed income ETFs, many people’s preferred tool for bond trading and investing.

The fixed income closing prices used to price FTSE Russell indices and benchmarks are also derived from trading activity on Tradeweb's platform.

Tying prices to central execution venues is helping drive the efficiency of all the fixed income markets. The London Stock Exchange Group (LSEG), owner of FTSE Russell and majority owner of Tradeweb, is at the forefront of that modernisation trend.

Rising demand for customisation

Second, there’s rapidly rising demand for customisation. When choosing a benchmark or index, people want finer and finer cuts of the bond market to express their individual views.

For example, investors may want an index of the top 100 liquid bonds from a particular market segment. Or they may want an index that selects a particular credit risk category or duration exposure.

FTSE Russell helps clients develop custom solutions that are curated to clients’ wishes. We have the capacity and the expertise to guide investors and asset owners along in that process.

None of this would be possible without the rock-solid foundation provided by our legacy fixed income benchmarks, with their associated governance infrastructure, history, data and analytics: our world-famous FTSE World Government Bond Index celebrates its fortieth birthday at the end of this year.

Finally, in this information-driven economy, clients want immediacy and quality of content at their fingertips.

FTSE Russell’s Index Module allows users to design a custom benchmark, research historical trends and perform in depth analysis on the fixed income universe across the full suite of FTSE Fixed Income indices.

Clients come to us because they trust the independence, quality and accuracy of our information. They know that they can speak to the right counterparts to get things done.

We have the knowledge, the expertise and the ability to connect the dots for clients. All this helps them navigate the rapidly changing fixed income markets with confidence.

In this information-driven economy, clients want immediacy and quality of content at their fingertips.

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© 2024 London Stock Exchange Group plc and its applicable group undertakings (“LSEG”). LSEG includes (1) FTSE International Limited (“FTSE”), (2) Frank Russell Company (“Russell”), (3) FTSE Global Debt Capital Markets Inc. and FTSE Global Debt Capital Markets Limited (together, “FTSE Canada”), (4) FTSE Fixed Income Europe Limited (“FTSE FI Europe”), (5) FTSE Fixed Income LLC (“FTSE FI”), (6) FTSE (Beijing) Consulting Limited (“WOFE”) (7) Refinitiv Benchmark Services (UK) Limited (“RBSL”), (8) Refinitiv Limited (“RL”) and (9) Beyond Ratings S.A.S. (“BR”). All rights reserved.

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